1. Discussion of Bach-Metzger: Are shareholder votes rigged
Discussion of Bach-Metzger: Are shareholder votes rigged? Mannheim, August 2017 Moqi Groen-Xu, LSE

2. German dialectics
Thesis
Antithesis
Synthesis

3. Thesis (the paper) SH votes are rigged
Management holds extraordinary power over the voting process (11% of how many?)
Corporate elections should be a fair process and not rigged
How?
More systematic bias when turnout is high
Management acquires additional voting rights by themselves (option exercising)
When?
Likelihood higher if greater potential to lead to change in corporate governance provisions
Proposals supported by proxy advisors
Model
How to make the process more competitive, less prone to manipulation
Signal → can bias results

4. Antithesis (1/2) Normal campaigning vs. “rigging” “Rigged”
“Power”
Not many contested proposals – little power over others?
What is the counterfactual?
“Fair process needed”
Isn’t higher turnout “fairer”? What is fair?
“Turnout is high”
Contested proposals: turnout is also higher because the likelihood for be pivotal is higher
Why are these proposals close to begin with?
Shareholders are “biased” towards management because they chose to hold the shares

5. Antithesis (2/2) “Change in corp. gov. provisions”
Which firms are more likely to implement vote outcomes? Perhaps where it is easier?
“Proxy advisors”
Proxy advisor agreement does not necessarily imply more valuable proposals.
First line of defence: change mind of proxy advisor. If not possible, campaigning as last line of defence
“Option exercising”
Even management is free to sell shares if it is their property, especially at a personal cost
“Process more com-petitive ”
Misfit with empirics: Signal was not observable to either side before 2013

6. Synthesis (1/3) Distribution of votes has abnormal mass around 50%
Looks like managerial campaigning is more successful
How much?
Good or bad?

7. Synthesis (2/3) Distribution of votes has abnormal mass around 50%
Looks like managerial campaigning is more successful
How much?
We don’t observe actual distribution of preferences although your model can help estimating
Magnitudes
Counterfactuals
Costs of campaigning for different sponsors
Role of access to preliminary data
Good or bad?

8. Synthesis (3/3) Distribution of votes has abnormal mass around 50%
Looks like managerial campaigning is more successful
How much?
Good or bad?
Look at returns (also can contribute to RDD literature)
Types of proposals
Long-run and spillover turnout effects
ISS recommendations when they have incentives to be biased
Presence of cross-owners/owners of competitors
Boilerplate proposals
Proposals usually supported by SH by larger margin

9. Thank you for giving me this paper to discuss